SK On Co. will construct South Korea’s biggest production line for lithium iron phosphate batteries dedicated to energy storage systems, as the company tries to close a widening gap with domestic competitors in a government-backed procurement program worth ₩20 trillion ($13.5 billion).
The move marks an aggressive pivot for SK On, which has lagged behind LG Energy Solution Ltd. and Samsung SDI Co. in capturing ESS contracts. Korean battery makers collectively hold less than 10% of the global ESS market, where Chinese manufacturers CATL and BYD maintain dominant positions through lower-cost LFP technology.
SK On’s domestic expansion follows a turbulent period. The company recently dissolved its BlueOval SK joint venture with Ford Motor Co., with operations splitting across facilities in Tennessee and Kentucky. That breakup freed SK On to pursue a broader customer base beyond automotive clients.
The timing reflects an industry-wide recalibration. With global EV demand growth slowing, all three Korean battery giants are converting underutilized vehicle battery lines to stationary storage production. LFP chemistry, while offering lower energy density than nickel-based alternatives, costs roughly 30% less and provides superior durability for grid applications.
Whether SK On can meaningfully challenge established Chinese suppliers in public tenders remains uncertain, given their years of accumulated production expertise and supply chain advantages.
